- Passenger numbers:
- Domestic: 21.6 million, +3.0% year-on-year;
- International: 47.7 million, +11.9%;
- South Korean carriers: 31.8 million, +13.0%;
- Foreign carriers: 15.9 million, +9.6%.
South Korea's int'l pax numbers up 12% in 2012, LCCs handles 3.6 million int'l pax
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Korean LCCs: fleet surpasses 100 aircraft but market faces growth constraints; China the latest
Korea's LCC sector ended 2016 with 103 aircraft – the first time the collective fleet had crossed the 100 mark for what, until recently, was Northeast Asia's most dynamic market. Korea has six LCCs, with Jeju Air regaining a strong lead as the largest LCC. Half of Korea's LCC fleet has been added in the last three years. It is Northeast Asia's largest LCC market after China and, surprisingly, well ahead of Japan.
But overall Northeast Asia's LCC sector is pale in comparison to Southeast Asia, whose LCCs operate 74% more aircraft. Lion Air alone has more aircraft than all of Korea, while the AirAsia Group has more than all of China. Only three of East Asia's ten largest LCCs are in Northeast Asia.
And it is unclear how much further Korea's LCCs can grow in the short term. They have mostly flown domestically, and slots are now constrained. International opportunities are also challenging, and further complicated by the Jan-2017 decision of China to reject charter applications during the popular – and very profitable – Chinese New Year. Korea's LCCs needed liberalisation, not antagonism.
Air Seoul launches to support its parent, Asiana. Korea's seventh LCC, Nambu Air, plans start-up
Asiana Airlines has joined All Nippon Airways in having two LCCs: Asiana's Air Seoul launched in the Korean domestic market on 11-Jul-2016 and will expand to international markets in Oct-2016. Air Seoul gives Asiana access to the Seoul market via an LCC under 100% ownership, whereas its first LCC, Air Busan, is mostly focused on the Busan market and Asiana is only one investor. Asiana is transferring slots to Air Seoul at Jeju airport, which is capacity constrained.
Asiana must make up for the lost time when it was largely absent from the Seoul LCC market, which is becoming dominated by Jeju Air, Jin Air and foreign LCCs. Yet Air Seoul's agenda is not ambitious – starting by taking over monopoly Asiana routes to secondary Japanese cities. Such a cautious "hand-me-down" route strategy may improve finances but prevent Air Seoul from establishing a necessary presence in more major markets. It is also unclear whether Asiana's secondary short haul international routes, with which it has struggled over a few years, can even be profitable on an LCC platform. It may be early days for Air Seoul, but it is flying A321s in a very low density 171-seat configuration.
Meanwhile, a seventh LCC – Nambu Air – has been proposed by South Gyeongsang Province, which lost a bid to construct a new airport for southeastern Korea, including the second largest city Busan.